Donors Sweetened Director's Pay At MoMA, Prompting Questions

By STEPHANIE STROM

Published: February 16, 2007

Glenn D. Lowry, director of the Museum of Modern Art for nearly 12 years, has long been one of the highest-paid museum officials in the country, with salary, bonus and benefits totaling $1.28 million in the year that ended June 30, 2005, the most recent period for which figures are publicly available.

Yet for more than eight years, his income was even higher than the museum reported in its tax forms, thanks to a trust created by two of the museum's wealthiest trustees, David Rockefeller and Agnes Gund.

Mr. Rockefeller, Ms. Gund and Ronald S. Lauder, another trustee, made tax-deductible gifts to the trust, the New York Fine Arts Support Trust, as did Mr. Rockefeller's brother Laurance, who donated a Bonnard painting valued at $800,000 that was later sold. The trust used the money to make payments to Mr. Lowry.

Between 1995 and 2003, that trust paid him a total of $5.35 million -- in amounts ranging from $35,800 to $3.5 million a year -- aside from the compensation supplied by the museum. Last year, those trust payments attracted questions from the New York State attorney general's office. To address those concerns, the museum disclosed some of the payments in a one-page supplement dated Jan. 5 and filed with the attorney general's office and with GuideStar, a Web site that provides data and research about nonprofit groups. The state was satisfied with that response.

The Internal Revenue Service does not discuss specific taxpayers. But former state and federal regulators contacted by The New York Times said the system of payments by the trust was unorthodox and raised many questions, ranging from the completeness of the trust's and the museum's tax reporting to whether the I.R.S. was fully aware of the trust's purpose when it granted it a tax exemption.

Asked for comment, Mr. Lowry and the museum referred all questions to Kim Mitchell, a MoMA spokeswoman. Pressed for details, she said in an e-mail message that the trust had been created as part of the effort to recruit Mr. Lowry to take over the museum in 1995.

For example, while the museum covered the down payment Mr. Lowry made on an apartment he bought in Gracie Square that year, the trust reimbursed him for all his mortgage payments.

Then, in 1999, the trust bought that apartment for MoMA in a $3.4 million purchase from Mr. Lowry. Mr. Lowry pocketed the $1.3 million in profit on the sale, Ms. Mitchell said, ''in lieu of any deferred compensation the museum would have had to provide in the future.''

Ms. Mitchell said Mr. Lowry paid income taxes on all the money he received from the trust.

And in 2004, the museum purchased an apartment in Museum Tower on the MoMA campus on West 53rd Street, where Mr. Lowry, 52, now lives rent-free.

Mr. Lowry and his stewardship of the museum have been a focus of growing art-world attention -- often highly critical -- since the museum reopened in November 2004 after an $858 million expansion. Some have faulted MoMA for a corporate atmosphere in which the intimacy of the viewing experience has been lost and suggest that curators have forfeited too much of their autonomy.

Of course, like college presidents, star professors and top hospital executives, directors of the nation's most prestigious museums routinely receive generous fringe benefits, like free rent or interest-free loans for home purchases. Directors of the Metropolitan Museum of Art and the Guggenheim Museum also receive housing compensation.

In an interview, Gerald A. Rosenberg, who was in charge of the state attorney general office's charities bureau until January, said the office was satisfied by MoMA's Jan. 5 filing on the trust payments. He said the bureau had originally raised questions because it was concerned about adequate disclosure.

When the museum files reports, Mr. Rosenberg said, ''it has a duty to be truthful and complete.'' He added, ''If there are any material omissions, that could mislead other institutions in comparable situations, as well as state and federal regulators and others relying on the data.''

Marcus S. Owens, a lawyer who formerly headed the division of the Internal Revenue Service that oversees nonprofits, said he did not consider the recent filing to GuideStar adequate.

''They've essentially admitted to GuideStar that more compensation was paid than has been reported,'' Mr. Owens said. ''Unless they filed an amended return with the I.R.S., though, they have a federal tax problem.''

''It's too cute by half,'' he said, adding, ''This is the sort of issue that often brings the I.R.S. or state regulators into a case, and then they use it as a can opener to get into other things.''

William Josephson, Mr. Rosenberg's predecessor in the New York attorney general's office, examined the trust's tax forms at the request of The Times and said the trust might have violated laws governing grants to individuals, as well as various withholding requirements.

''I've never seen anything like it before in my life,'' said Mr. Josephson, who has practiced law relating to nonprofits for more than 40 years.